Now is not the time to attempt to catch falling knives. Nor is it the time to stubbornly hold onto equities and pray. The downside risks are tremendous in the stock market. The upside potential is small. If you do not care to short equities, then hiding out in short- to midterm U.S. Treasuries or money markets is a very good idea.

Forget emerging markets, forget the loonie, forget the Australian dollar, forget anything and everything related to the bull market strategy of buying the dip. We may or may not have more individual plays from the long side (except in the metals), but remember, we hold such stocks because they are in a long term bull at least for 3 more years.

I also look forward to buying gold at some point in the future, but not until we see the right entry. One look at the volatility of those charts (as well as the technical formations) should be enough to tell you why I am on the sidelines or why we short the stock market since May.

At this point, capital preservation is far more important than capital gain. Opportunity is easier to make up than losses. (And that last statement goes triple for bear markets). If you are unable or unwilling to short equities, then our advice (near term, at least) is to get on the sidelines now while the stocks are rallying and wait this out.